“…US Treasury data show that China has cut its holdings of Treasury debt by roughly 0 billion (L65 billion) over the past year to 4 billion…
Two epochal forces are colliding in the global bond market: core deflation is gathering force but the West is losing sovereign credibility just as fast.
Arch-bear Albert Edwards at Societe Generale advises clients to prepare for a violent policy swing from one extreme to the other. First we deflate into the abyss: Then we inflate hard rates to get out again. At some point the “euthanasia of the rentier” will wear off. Misjudge the sequence at your peril.”
“America no longer needs Chinese money, for now”
Ambrose Evans-Pritchard, The Telegraph, London, 8/23/10
“The Federal Reserve has been at the top of the news for a long time and it’s getting a lot of attention now as it appears the next down cycle in the depression may be upon us. So what’s the real reason the world listens so intently to an Ivy League bureaucrat like Bernanke? Of course, it has nothing to do with him. It’s who he is accountable to–the international banking cartel:
These institutions are the current primary dealers of the Federal Reserve System. They have power over the entire economy, everything in “the market,” very much a non-free market. They sit at the top of the world’s monetary system, currently the Fed’s debt-dollar pyramid, with a governmental license to what has been the most secure capital in the world–US Treasury debt–for a monopoly price that nobody else can get…
These banks get first dibs on buying the servitude of the US population through the Fed/Treasury auction process. They distribute some of it to subordinate capital for a guaranteed premium, and they park a large amount of it on their own balance sheets as assets upon which they can speculate, trade, and fractionalize to create the rest of the money in the economy and put other countries, companies, and people in even more debt. So these institutions hold a monopoly position that even leviathan Standard Oil never dreamed of: a government-enforced usury license that generates trillions for their premium capital holders and senior employees and allows them to act as imperial armies sucking in more territory around the world as neoliberalism breaks down sovereignty…
…The institutions aren’t national. The list only indicates that the banking establishment has a permanent parasitic stake in those countries to churn their populations under the Fed’s debt system. All of the listed institutions are global in nature… they have power over nations. Like any corporate institution, banks drive earnings per share (EPS) by expanding and leveraging their balance sheets, which for banks means putting everything else in more debt. So these cartel banks work to expand their territorial control beyond their national borders to put other populations in debt. This is a mathematical requirement of exponential growth enforced by the private capital system. The eventual end state of this dynamic is one integrated, global banking empire. It’s only a matter of time before their collective balance sheets…control the rest of the world if people don’t awaken and choose to put a stop to it.
Will they succeed?”
“Monopoly Money and the International Banking Cartel”
Dvrabel, Council on Renewal, 8/12/10
“Manipulative selling of gold on the daily London PM fix has failed to suppress the gold price since April 2009, when China announced that it surreptitiously had accumulated a large gold reserve over the previous five years, GATA board member Adrian Douglas disclosed today in a statistical study. Since then, Douglas finds, ever-increasing dumping of gold in London by central banks and their bullion bank agents has been having less and less effect on the gold price. He concludes that the second “London Gold Pool” — a clandestine one, unlike the first — is imminently facing a collapse identical to the collapse of the first as physical gold demand overwhelms the ability or the desire of the market riggers to provide the necessary metal. Douglas’ study is titled “The Failure of the Second London Gold Pool” and you can find it at GATA’s Internet site here:
“Adrian Douglas: The imminent failure of the second London Gold Pool”
Submitted by cpowell, GATA, 8/18/10
“Remember, government and the Fed produce nothing – they only manipulate the process and essentially expropriate the wealth of the wealth producers…
All kinds of excuses are made for government, banking and Wall Street, but none of them create wealth. They control our lives by force, usually legally by paying off our electoral representatives…”
Bob Chapman, The International Forecaster, 8/21/10
“L.B.M.A. IS DEAD, DRAINED, AND DEFUNCT. LIKE THE BIG BANKS, IT IS A ZOMBIE SHELL OF A MARKET ENTITY. A MAJOR RUN ON THE BULLION BANKS HAS BEGUN IN EARNEST. ITS PHONY STRUCTURE IS BEING REVEALED. SETUP STORIES ARE COMING TO HIDE ITS EMPTY INVENTORY. THE DATA DARK EVEN IN LATE JULY WAS PROBABLY DUE TO A SUCCESSFUL LEGAL RAID.”
“LBMA was raided in JULY, Portugal gold; B.I.S. GOLD SWAP & L.B.M.A. DRAIN”
Jim Willie, investorvillage.com, 8/22/10
Increasingly, Credible Evidence indicates that the International Banker Cartel* and Allies are about to suffer their First Significant Loss since President Andrew Jackson (“The Bank tried to destroy me, but I destroyed it first” – Ed. a Paraphrase) liquidated the Second National Bank of the United States in 1833.
We must hasten to add that we do NOT believe the Entire Mega-Bank Cartel* is about to collapse – far from it. Indeed, overall The Cartel’s Power was enhanced by the supine U.S. Congress’ Passage of the ostensible FinReg Bill.
What we do mean is that the Cartel’s* (in its Modern incarnation led by the Private for-Profit Fed) years-long, ongoing, and hitherto mainly successful, attempts to suppress the Price of Gold and Silver, may Collapse in the next few weeks. Or at least become even less effective than in recent months.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions – III” and Deepcaster’s July, 2010 Letter entitled “Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds” in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at Deepcaster’s website. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at Deepcaster’s website have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
Deepcaster and others have recently made the case that there are many good reasons for the Prospective Collapse of The Cartel Precious Metals Price Suppression Regime and soon.
We and several others have called attention, for example, to the mounting evidence that Major Gold Repositories likely do not have anywhere near the Physical Gold they represent they do (see “GOLD: Opportunities + Threats = Opportunities” (06/11/10) in the ‘Articles by Deepcaster’ Cache at Deepcaster’s website and the Quotes from A. Douglas and J. Willie above).
Most recently GATA Board Member Adrian Douglas has made a significant contribution (see Quote above) to the Evidence of such Chicanery and, therefore, to the body of Evidence that such a Collapse may be close at Hand.
Thus The Critical Issue we address today is: In the event of a Collapse of The Cartel’s Precious Metals Price Rigging Operation, what are the likely Collateral Effects? And how can we Profit and Protect.
Yes, Profit and Protect, because not all the Collateral Effects will be Positive, not at first anyway.
The First, and Most Obvious likely Positive Effect is that those who have placed a significant portion of their Wealth in Gold and Silver, and Gold and Silver Mining Shares, will be richly rewarded due to a Massive and very rapid increase in their Wealth as measured in Fiat Currency Terms.
Holders of Physical Bullion and Quality Mining Shares will be especially richly rewarded.
As well such a Fiat Currency Crash in terms of Gold and Silver may temporarily cause Equities Markets to Bounce.
That is because, in that event, it would take more weakened Fiat Currency (in Purchasing Power terms) to purchase Equities, thus increasing their Nominal Prices).
But the accompanying loss of faith in Government and the Financial and Economic Systems, would likely cause such a Bounce to be short lived.
Thus, such a Stratosphere Launch of Precious Metal Prices, will almost surely be accompanied by a Massive loss of faith in, (and Purchasing Power of) Fiat Currencies in General, and in the Governments and Central Banks that sponsored them.
This would likely rapidly launch a Devastating Hyperinflation (manifest in the Fiat Currencies), Weimar Republic style.
Even in the event of such a Hyperinflation Investors are likely to favor Tangible Assets over depreciating, or even apparently appreciating, “Paper” Assets.
In other word, such a Precious Metal Prices Regime Rigging Collapse could trigger or exacerbate a Worsening Hyperinflation. As Fiat Money increasingly rapidly loses its Purchasing Power its Velocity increases, thus exacerbating it rate of loss of Purchasing Power (cf. The Weimar Republic) in a Lethal Spiral.
Such a Scenario would likely breed Panic with a consequent Assault (whether justified or not) on Government and Other Institutions, and consequent Societal Turmoil.
In such an event, Bank “Holidays” and a Governmental attempt to confiscate Precious Metals (a la the Gold Reserve Act of 1934) could be The Order of the Day.
In this event, holding Bullion in Legal Tender Coins might provide some protection from confiscation, as the Numismatists Exception to the 1934 Act did in the 1930s.
But before addressing further likely consequences of The Collapse, it is essential to consider what is likely to occur in The Run-Up to The Collapse.
First, it is highly likely The Cartel would be the first to know when their Precious Metal Price Suppression Regime Collapse (i.e. Gold and Silver Price Launch) would likely come, before anyone else, and would be able to prepare.
Just what would that preparation likely entail?
It would likely entail preparing to impose a Successor Regime which would perpetuate and Maximize The Cartel’s Power and Profits.
It would also likely entail the attempted the much Broader imposition of some Global Currency (which already exists in its Fetal Form – the IMF SDR’s).
And it would likely also entail the attempted further imposition of powerful Globalist (as opposed to Internationalist) Institutions.
The Sovereignty of Major Nations and the Civil Liberties (such as they are) of their Citizens would be at greater risk even than they are today.
In sum, as the evidence indicates, and as we have earlier laid out, The Cartel most likely has, and is likely already implementing, a comprehensive ‘End Game’ Plan (for more details read our “Surmounting The Armageddon Scenario & Cartel ‘End Game'” (2/26/10) in the ‘Articles by Deepcaster’ Cache at Deepcaster’s website).
Given that The Cartel is surely preparing, we should prepare too – The Coming Crisis is also an Opportunity. Consider the following Facts, and then Our Strategy and its Upside Potential:
Powerful Forces should continue to impel Gold and Silver upward as Richard Russell explains:
“The public doesn’t understand that the stock market is in the process of topping out. Even as business news turns rosy, stock holders are beginning to show losses. So while the public is losing money in the stock market, they are missing out in one of the greatest bull markets in history the gold bull market, which is now heating up. The smart money of the world is fleeing fiat currencies and loading up on gold as well they should.”
Richard Russell, Dow Theory Letters
The “Gold Bull Market… is now heating up…” to where?
So let’s consider just what those inflation-adjusted Gold and Silver highs could be. John Williams of Shadowstats.com provides a cogent answer:
“Even with the June 8th historic high gold price of ,246.00 per troy ounce, the earlier all-time high of 0.00 (London afternoon fix, per Kitco.com) of January 21, 1980 was not breached in terms of inflation-adjusted dollars. Based on inflation through May 2010, the 1980 gold price peak would be ,384 per troy ounce, based on not-seasonally-adjusted-CPI-U-adjusted dollars, and would be ,595 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.
In like manner, the all-time high price for silver in January 1980 of .45 per troy ounce (London afternoon fix, per silverinstitute.org) has not been hit since, including in terms of inflation-adjusted dollars. Based on inflation through May 2010, the 1980 silver price peak would be 9 per troy ounce, based on not-seasonally-adjusted-CPI-U-adjusted dollars, and would be 2 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.” (emphasis added)
“Inflation Update, Housing and Production”
John Williams’ Shadow Government Statistics, 6/17/10
What is immediately striking about these numbers is how far below the Inflation-Adjusted Highs Recent Highs are.
It is important to consider just how far. As we write, Gold is trading around 30/oz.
The Gold Price of 30 is a mere 16.2% of the Real Inflation-adjusted 1980 high of , 595.
And the Silver Price at about /oz. (as we write) is a mere 4.1% of the 1980 Inflation-adjusted high.
Yet above-ground stores of Silver are Small relative to Demand and are depleting!
These figures show how effective The Cartel has been in suppressing Precious Metals prices in recent years.
These numbers also gives us an important Clue regarding the potential highs for Gold and Silver.
From an historical and Supply perspective, Silver is a somewhat better Buy now than Gold (But given the figures above, both are Sweet Deals these days).
This Historical Trading Ratio of Gold to Silver in Price is 16:1. But recently it has been 68:1 up from 64 in December, 2009.
And while there are about 5 billion ounces of above-ground Gold extant today, there are only about 1 billion ounces of above-ground Silver left (Prior to WW2 there were 10 billion above-ground ounces of Silver) And Silver is not only a Monetary Metal, it gets widely used, and used up, by Industry.
So today, Silver would seem to have a higher price Appreciation Potential than (the admittedly very high Price Appreciation Potential of) Gold EXCEPT that it is, a smaller, and, if anything, a more heavily manipulated (by The Cartel) Market than Gold.
In sum, both have dramatic Price Appreciation Potential.
Thus, in light of repeated Cartel attacks on Gold and Silver Prices in recent years, Deepcaster has developed a Strategy to Maximize Profits and Minimize losses from these Cartel Price Suppression attacks. This Strategy also is designed to enhance the chances of Profiting from a Cartel Precious Metals Price Suppression Regime Collapse. Key Aspects of that Strategy are:
A. Recognizing that while The Cartel is still Potent, it is significantly less potent than it was even a few months ago due primarily to:
a) The years-long efforts of the leaders and members of GATA in exposing Precious Metals Price Suppression
b) The stunning Allegations that Major Gold Repositories do not have nearly as much Physical Gold they say they do. See the following allegation regarding GLD and Deepcaster’s recent article (in the ‘Articles by Deepcaster’ Cache at Deepcaster’s website) regarding the allegations concerning the London Bullion Market Association.
“…another CNBC guest, David Lutz, managing director of the Stifel Nicolaus brokerage and investment banking firm in St. Louis, having been asked for his recommendations in regard to gold, disparaged the gold exchange-traded fund GLD as follows: “I wouldn’t necessarily look at the GLD because they don’t invest in the physical gold.””
“CNBC, GLD is dissed for not investing in physical gold”
Chris Powell, GATA, 5/12/10
These reports are doubtless (and understandably) leading Major Gold Investors to demand Delivery and possession of Physical Gold.
B. Thus we recommend that Investors follow their lead with a significant portion of the funds you allocate to Precious Metals purchases committed to purchasing, and taking Personal Delivery of, Physical Gold and Silver.
Indeed, because Physical held in one’s personal possession is so precious, some Forms of it trade at as much as a 25% premium to the spot price of “paper” Gold.
But not all forms of Physical are Equal, as it were.
Some forms are much more liquid than others, and some are much more susceptible to counterfeiting, as e.g. by Tungsten-lacing.
Deepcaster has recently recommended Purchase of One Form of Physical Gold (and Silver), that is quite liquid, not easily susceptible to counterfeiting, and commands about a considerable premium (about 25% recently) over the spot price of Paper Gold (and Paper Silver). See Deepcaster’s Alerts “Real Moves & Fake-outs Launching; see Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds; & Buy Reco.” (week ending 5/14/10) and “Cartel Failing? Precious Metal Buy Reco! Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & Bonds” (week ending April 16, 2010) in the ‘Alerts Cache’ at Deepcaster’s website.
C. Do not give Short Shrift to Gold and Silver Miners.
But purchasing shares of these should be done with particular care, because, being “paper” (or, usually, electronic entries on some remote server) Miners shares are especially vulnerable to periodic Cartel attacks and Price Takedowns.
Thus, they are most profitably accumulated near interim lows resulting from Cartel Interventions.
In order to estimate these interim lows one needs not only to consider Fundamentals and Technicals, but also Interventionals, as Deepcaster does.
D. Buy the Dips! And as for determining approximate Interim Bottoms of these dips, Deepcaster has developed helpful Guidelines (See “Defeating the Cartel… With Profit, Part 2” (6/19/2009), “Defeating the Cartel… With Profit, Part 1” (3/28/2008) and “Profiting From Cartel Intervention” (06/30/06) in the ‘Articles by Deepcaster’ Cache at Deepcaster’s website) to enhance the chances of buying at the right time, and thus maximizing profit. And for Deepcaster’s latest Forecasts for Gold and Silver Prices, see our latest Alerts in the ‘Alerts Cache’ at Deepcaster’s website.
E. Finally, we recommend that Investors not keep their Physical Gold and Silver in Bank Vaults for the following reasons enunciated by Jim Rickards.
“Interviewed by Eric King of King World News, Jim Rickards, senior managing director of the Omnis Inc. consulting firm in McLean, Virginia, says:
— Far more claims to gold have been sold than can be delivered upon.
— To save the dollar the United States will be forced back on a gold standard with convertibility and gold revalued to ,500 per ounce.
— China’s need for gold to back its own currency and hedge its U.S. debt exposure is massive but the metal isn’t available even as the Chinese government is commandeering the output of Chinese mines.
— And gold owners should keep their metal in vaults not operated or controlled by banks, since keeping gold in bank vaults negates gold’s purpose as a wealth preserver outside the banking system, which is vulnerable to a run on gold banks.”
“Don’t keep your gold in bank vaults”
Jim Rickards, King World News via GATA, 4/13/10
In sum, had the price of Gold not been suppressed, and in light of the ongoing Economic Crisis, it should already be priced in excess of ,600/oz (and Silver in excess of 0/oz), the approximate 1980 inflation-adjusted highs.
It is reasonable to expect to see those prices in the next very few years, or sooner, given the Cartel’s recently impaired ability to sustainably take down Precious Metals Prices.
The Gold and Silver Bull Market has only just begun and a Crash of The Cartel’s Precious Metals Price Suppression regime would impel it higher faster. That’s the Good News.
The Bad News is that Bullish launches of Precious Metals prices are likely to be accompanied by increased Social Stress and Turmoil, as the world adjusts to a Renaissance of Real Money – the Precious Metals.
Indeed, the Boy Scout Motto is appropriate here: “Be Prepared”.